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assertion that their payment was contingent on the resolution of a separate legal challenge, recognition of this payment was also deferred until that case was decided by the 9th Circuit Court of Appeals. Now that the court has ruled in the City' s favor, these revenues have been recognized and are available for appropriation. The City is also expecting about $800,000 from Qwest during FY05. The total of these two amounts, $10.2 million, is included in the financing plan for the Community Safety Building. The City Attorney has opined that the risk of having to refund these fees to Qwest is "very unlikely". Nevertheless, staff would not sign a construction contract until the legal issues surrounding these revenues are finally resolved. While past council direction has devoted funding from the telecommunications tax to telecommuni- cations projects of community benefit, the settlement payments provide a unique opportunity to fund a large portion of the Downtown Space Plan projects. This large one-time resource is also appropriately used for a high-priority capital project under the City's financial policies. The figures shown in the financing plan represents the deferred revenue amounts plus the amount needed for telecommunications projects within the building. Right-of-Way Revenues in the General Fund: The City has been the subject of legal challenges to the imposition of right-of-way revenues in the General Fund. In addition, the City has been performing audits on some of the payers of the right-of-way fees. The largest of these revenues is related to the Qwest lawsuit. Qwest appealed the US District judge ruling favoring the City and the 9th Circuit Court ruled in the City's favor in October 2004. Consistent with the City's practice of deferring recognition of contested revenues, the City had deferred recognition of these revenues while awaiting the decision of the court. As of June 2004, the City recognized approximately $3.9 million and an additional $1.3 million was expected to be received during FY05. The sum of these amounts equals the $5.2 million included in the financing plan. As mentioned above, the City Attorney has given an opinion that the chance that Qwest would be successful in any attempt to have these fees refunded is "slim". Staff would not, however, sign a construction contract based on these revenues until the legal issues are resolved. Interest Earnings on City Cash Balances: As cash sits in City coffers until it is needed for design or construction cost, interest will accrue. For City cash funded projects, it is appropriate to include a con- servative amount for estimated interest earnings. Other Miscellaneous Funds: A number of other miscellaneous funding sources could be applied to this project. For instance, it might be possible to sell energy tax credits, to receive EWEB energy rebates, or to receive grants from other levels of government for the project. A small placeholder is shown in the financing plan for these kinds of items. Operating and Maintenance Costs Although not part of the plan for financing the capital costs, it is important to consider the estimated operating and maintenance costs for the new building. The preliminary estimate of the ongoing O&M costs for a basic Community Safety Building would equal $1.1 million. About half of the O&M cost represents daily building custodial, energy and other out of pocket costs for operating the building. The other half represents the longer-term preservation of the building, which includes preventive mainten- ance funded by facility maintenance rates and building preservation projects funded from the General Fund capital budget. There will be a reduction in the amount needed to maintain any space that is no L:\CMO\2004 Council Agendas\M041122\S041122B.doc